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  • Why CBN Act (2007) should be amended

    Why CBN Act (2007) should be amended

    Majority of reports and analysis of Tuesday, October 23, 2012 on the subject of the Public Hearing on the touchy issue of amendment of the Central Bank of Nigeria Act, 2007 tilted against the proposed amendment. The position of the CBN Governor based on the Reuters report from Tanzania where he was attending a meeting of the African Development Bank (AfDB) shows his vehemence over the impending amendment.

    Bank stakeholders including former governors and directors of CBN have the same view with Sanusi Lamido Sanusi (SLS). The Nigeria Labour Congress was also ad idem with this seemingly popular view of “no-amendment.” I am in opposition to the “no-amendment” campaign although there are certain propositions in the amendment I disagree with.

    I do not support the proposed composition of the CBN Board, which is scheduled to include a Director in the Ministry of National Planning, Director of Federal Inland Revenue Service, among others. The business of the CBN is too serious to be handed over to some of these nominees who are not profound in monetary policies and banking practices.

    Moreover, appointing a former CBN Governor as chairman of the Board may create problems that will polarize the Board. A former CBN Governor may have “analogue” ideas while the sitting CBN Governor may have “digital” ideas. The latter may be hampered by the former who may refuse to acknowledge the rapid changes manifesting in global economic trends.

    The whole essence of the CBN Act of 2007 is to clothe CBN with a garb of autonomy for monetary and price stability in the economy. At that time, the framers of the law thought that each CBN Governor will assume his position, concentrate on his job and paddle through the vicissitudes of economic combinations and permutations.

    It was not conjectured that a certain SLS will appear on the political firmament of Nigeria and use CBN as fulcrum to challenge the powers of the National Assembly on appropriation, donate huge sums of money to Kano and Madallah bomb victims, make political statements at will and enjoy controversy as fish enjoys an aquatic environment.

    It was also not contemplated that the nation will be saddled with a CBN Governor who runs a secretive and speculated annual budget of about N400billion (almost 10per cent of the total annual national budget) for a population of not up to 5,000 persons (who constitute the Board members and staff of CBN).

    One: The power of the National Assembly to appropriate public fund of the Federation is derivable from the Constitution of the Federal Republic of Nigeria, 1999 as amended. Various sections of the Constitution confirm this position. For instance, section 80 (3) of the Constitution provides that:

    No moneys shall be withdrawn from any public fund of the Federation, other than the Consolidated Revenue Fund of the Federation, unless the issue of those moneys has been authorised by an Act of the National Assembly.

    Section 81 (1) and (2) of the Constitution (as amended) makes it mandatory for the president to lay before the NA budget estimates by way of Appropriation Bill before money can be expended from the Consolidated Revenue Fund of the Federation. Section 4 of the Constitution as amended provides:

    (1) The legislative powers of the federal Republic of Nigeria shall be vested in a National Assembly for the Federation which shall consist of a Senate and a House of Representatives.

    (2) The National Assembly shall have power to make laws for the peace, order and good government of the Federation or any part thereof with respect to any matter included in the Exclusive Legislative List set out in Part I of the Second Schedule to this Constitution.

    A closer look at the Exclusive Legislative List, Item 1, Part 1 of the Second Schedule shows that the National Assembly has exclusive power to legislate                   on –

    Accounts of the Government of the Federation, and of offices, courts, and authorities thereof, including audit of those accounts.

    It is indubitable that CBN derives its powers from the CBN Act of 2007. If this be so, it means that the Constitution (as amended) is in a tug-of-war with an Act of the National Assembly. In this contest, section 1 (3) of the Constitution resolves the matter by stating that “If any other law is inconsistent with the provisions of this Constitution, this Constitution shall prevail, and that other law shall to the extent of the inconsistency be void.”

     

     

     

     

     

     

     

     

     

    Therefore, any law that purports to take away from the National Assembly the power to appropriate expenditure arising from public fund is void to the extent of its inconsistency. Where are the checks and balances if the CBN Board that makes the budget is the same one that approves it? This is not how to exercise autonomy.

    Two: The CBN Governor is reported to have argued that the NA has, by the provision contained in section 6 (3) of the CBN Act, “donated” its power of appropriation to the CBN Board. One need not be a Senior Advocate of Nigeria to know that the legislature in a democracy cannot wholly donate a power donated exclusively to it by the Constitution, which is the suprema lex. It is a well-founded legal maxim that delegatus non potest delegare (that is, one cannot delegate a delegated authority) but even where partial delegation has been permitted in cases of this nature, the power of the delegator to retrieve the delegated power cannot be questioned. It is trite that he who has power to give also have power to take back. Can the CBN Board argue that the power to appropriate has been donated to it ad infinitum? This argument of the CBN is, therefore, grossly misplaced and without substance.

    Three: The Act should be amended to promote accountability and transparency. The CBN Act authorises the CBN to audit itself contrary to section 85 of the 1999 Constitution which authorises the Auditor-General of the Federation to carry out such function. Section 85 (2) of the Constitution states that “The public accounts of the Federation shall be audited and reported on by the Auditor-General who shall submit his reports to the National Assembly….”

    I refer readers to subsections (3) and (4) of section 85 of the said Constitution,  which provides as follows:

    (3) Nothing in sub (2) of this section shall be construed as authorising the Auditor-General to audit the accounts of or appoint auditors for government statutory corporations, commissions, authorities, agencies, including all persons and bodies established by an Act of the National Assembly, but the Auditor-General shall –

    (a) provide such bodies with –

    (i)   a list of auditors qualified to be appointed by them as external auditors and from which the bodies shall appoint their external auditors, and

    (ii) guidelines on the level of fees to be paid to external auditors; and

    (b) comment on their annual accounts and auditor’s report thereon.

    (4) The Auditor-General shall have power to conduct periodic checks of all government statutory corporations, commissions, authorities, agencies, including all persons and bodies established by an Act of the National Assembly.

    Notwithstanding the clear provisions of the Constitution on matters of audit, section 6 (3) (b) and (d) of the CBN Act provides that the CBN Board shall be responsible for:

    (b) the approval of the audited and management accounts and the  consideration of the management letter from the external auditors;

    (d) making recommendation to the President for the appointment of auditors in accordance with section 49 of this Act, the provision of the necessary facilities and the rates of remuneration.

    A juxtaposition of the constitutional stipulation on audit and that of the role of CBN on audit clearly shows that of CBN as unconstitutional in view of the conflict. In fact, under the CBN Act, the same Board that expends the public fund is responsible for the approval of the audited and management accounts and the consideration of management letter from the external auditors, and making recommendation to the president for the appointment of auditors. Certainly, the Auditor-General has not been given any role to play in the CBN Act thereby destroying the system of checks and balances required in a democracy.

    Four: The NA has argued that the Fiscal Responsibility Act of July 2007 is later in time and as such takes precedence over and above the CBN Act of May 2007 placing reliance on the legal maxim of lex posterior derogat priori. The CBN, on its part, seem to rely on the interpretation of generalia specialibus non derogant, which means that a general thing does not derogate from a special thing.

    In this context, the Fiscal Responsibility Act is the general thing while the CBN Act is the special thing. This implies that a general law like the Fiscal Responsibility Act cannot derogate from a specific law like the CBN Act. I tend to agree that the Fiscal Responsibility Act overshadows the CBN Act hence the CBN Act contains subordinate provisions to those of the Fiscal Responsibility Act and this is the intendment of the draftsman.

    Five: Not amending the CBN Act will amount to flagrant and express breach of section 21 of the Fiscal Responsibility Act, 2007. That section provides: Preparation of estimates of revenue and expenditures by corporations, etc.

    1.   The Government corporations and agencies and government owned companies listed in the schedule to this Act (in this Act referred of as “the corporations”) shall, not later than 6 months from the commencement of this Act and every three financial years thereafter and not later than the end of the second quarter of every year, cause to be prepared and submitted to the Minister their Schedule estimates of revenue and expenditure for the next three financial years.

    2.   Each of the bodies referred to in subsection(1) of this section shall submit to the Minister not later than the end of August in each financial year:

    a.   An annual budget derived from the estimates submitted in pursuance of subsection(1) of this section; and

    b.   Projected operating surplus which shall be prepared in line with acceptable accounting practices.

    3.   The Minister shall cause the estimates submitted in pursuance of subsection (2) of this section to be attached as part of the Appropriation Bill to be submitted to the National Assembly.”

    The schedule referred to in this section and attached to the Fiscal Responsibility Act listed 31 government corporations, agencies and companies affected by this section. In fact, CBN is the 31st and last corporation named in the said list. Other corporations named such as NNPC, NPA, NDIC, etc. have complied with the law while only CBN has successfully resisted compliance relying on the CBN Act. The CBN Act is not sacrosanct as power without control is vanity. Liberty (some call it “autonomy”) of the CBN must conform to the law. It was Charles Montesquieu, French historian (1689-1755), who said that “Liberty is the right to do everything which law allows.” What CBN wants is, in fact, absolute liberty. It is trite that the fact that the law has granted a person freedom of expression has not guaranteed him the right to shout “fire” in an amphitheatre where no fire is burning. Lord Acton (1834 to 1902) has said it that power tends to corrupt and absolute power corrupts absolutely. Leaving CBN Governor with absolute power, as it currently obtains in the CBN Act, is illogical and harmful to the society itself.

    Six: CBN is the only government corporation that fixes the salaries of its board and staff; makes and approves its budget; accounts to and audits itself. For instance, section 8 (3) of the CBN Act provides that salaries, fees, wages or other remuneration or allowances including pension and other allowances payable to the Governor and the deputy governors shall be as stipulated from time to time by the Board subject to the approval of the President.

    In practice, the President is too busy to scrutinize any sum fixed as salaries and wages by the Board. As it is today, the annual take-home pay of the Nigerian President is known but that of the CBN Governor is not known. The National Assembly wants to amend this provision so that the Revenue Mobilisation, Allocation and Fiscal Commission would bear the responsibility of fixing these salaries and wages.

    Can it be said that CBN does not have confidence in any other government institution except itself? How does this amount to loss of autonomy? In contrast to the CBN Act, section 9 of the Fiscal Responsibility Act, which created the Fiscal Responsibility Commission to regulate government corporations including the CBN, provides that emoluments, salaries, allowances and benefits payable to the Chairman and members of the Commission shall be such as the Revenue Mobilisation, Allocation and Fiscal Commission may from time to time approve. The envisaged amendment will only bring the CBN at par with international practices and cannot negatively affect its autonomy/independence as it is being bandied by some people.

    Seven: To reduce impunity on the part of the CBN, its Act should be amended. The Board of CBN is comprised of 12 members. Section 6 (2) of the CBN Act provides as follows: The Board shall consist of –

    (a) a Governor who shall be the Chairman;

    (b) four Deputy Governors;

    (c)  the Permanent Secretary, Federal Ministry of Finance;

    (d) five Directors; and

    (e) Accountant-General of the Federation.

    From this list, the four deputy governors and five directors are answerable to the CBN Governor, who is their boss. They kowtow and grovel to him on any issue, more so where under section 7 (1) of the CBN Act the CBN Governor determines who, among the deputy governors, acts for him in his absence. The tendency is that none of these subordinates will toe a different line on any position adopted by the Governor.

    The Permanent Secretary, Federal Ministry of Finance and the Accountant-General of the Federation, who are also members of the Board, are of no consequence even if they are opposed to a subject under consideration. From this scenario, the CBN Governor is the alter ego of the CBN Board. He is the Alpha and Omega of CBN. Tinkering with the composition of this Board in a fair manner will democratise the activities of the Board and save it from continuing as one-man show.

    The level of impunity being perpetrated by the CBN can never be allowed by any democracy marked by rule of law and adherence to order and good governance. What CBN calls “autonomy” is euphemism for “impunity.” In Sanusi’s comparative fallacy, he claims that 40 countries in his list of analogy covet autonomy. Well taken! What he did not tell Nigerians is whether the central bank of these 40 countries operate without any input from their parliaments.

    We are not told that these 40 countries have provisions in their laws which make their boards wholly subservient to their heads. The voices of Alhaji Ciroma, Joseph Sanusi, Green Nwankwo, NLC and others supporting the status quo will dim if and when they decide to look at this amendment in relation to the Constitution and the Fiscal Responsibility Act. It is only then they will understand that a part should not be greater than a whole and a subset should not be larger than the parent set. Since the CBN Act is an Act of the National Assembly, the same National Assembly that represents the voice of the electorate, has deemed it necessary to effect a change. Let us not resist this change. According to Blair J. Kolasa, in Behavioural Science, cited in Vanguard Book of Quotations, Compiled by Dr. Bamidele A. Sobowale, p. 26,

    We may not recognise it or otherwise be cognizant of it, we may oppose it, or even try to accelerate it. No matter what our position may be, change makes its course in the evolution of human effort. Change may take place so slowly that it is no perception in one rapidity that we are left somewhat breathless in the wake of the waves.

    If this change occurs, Sanusi may remember the words of Richard Cheney, American Secretary of Defence, in 1992 (cited in Vanguard Book of Quotations) to wit, “It is easy to take liberty for granted when you have never had it taken from you.”

     

    • Eze is a Lagos-based attorney and the Principal Counsel of the law firm of Eze & Associates.

     

  • ‘Board review’ll check executive recklessness’

    ‘Board review’ll check executive recklessness’

    Review of banks’ board of directors’role will help check executive recklessness and bring lasting stability to the banking sector, the Central Bank of Nigeria (CBN) has said.

    CBN Director, Banking Supervision, Agnes Martins, disclosed this at a meeting for banks’directors in Lagos.

    She said the role of the board of directors has come under increased scrutiny in the aftermath of the global market crisis and that lax board governance was a major corporate governance issue that fuelled the crisis.

    According to her, stakeholders are demanding reforms that would enable directors to discharge their responsibilities more effectively while being held accountable for their actions and for inactions.

    She explained that the role of bank’s boards is increasingly subject to public scrutiny, adding that the pressures on and responsibilities of bank directors have also increased.

    She said boards are expected to ensure compliance with complex and stringent reporting and regulatory requirements, safeguard their bank’s businesses against excessive risk and hold managers to performance targets to satisfy the demands of the market for improved returns.

    “The responsibility for the way in which a bank’s business is conducted lies with its board of directors. The board sets the strategic direction, appoints management, establishes operational policies and most importantly, takes responsibility for the soundness and profitability of the bank. It is answerable to depositors and shareholders for the lawful, informed, efficient and competent administration of the institution,” she said.

    According to her, while the board usually delegates the daily running of the institution to management, it retains the responsibility for the consequences of unsound and imprudent policies and practices concerning lending, investing, protection against fraud, among other things.

    However, she explained that the board is not in a position to guarantee a bank’s success, but must oversee the institution to ensure that it operates in a safe and sound manner and complies with applicable laws and regulations.

    “The board must establish an appropriate corporate culture and set the “tone at the top”, hire and retain competent management, stay informed about the institution’s operating environment, and ensure that a suitable risk management system that is commensurate with its size and complexity of operation is in place. It also must oversee the bank’s business performance,” she said.

    Martins reiterated the need for the board and senior management to establish culture by upholding corporate integrity and enforcing zero tolerance for compromised ethics. She said directors should understand that their actions and those of management reflect their attitudes about commitment to integrity, honesty, and ethical conduct.

  • Surge in MfBs fraudulent e-mails, says CBN

    Surge in MfBs fraudulent e-mails, says CBN

    •Customers get N4.3b refund

    FRAUDULENT e-mails in the microfinance bank sector have been on the increase, the Central Bank of Nigeria (CBN) has said.

    The apex bank said the sector recorded and processed 10,845 e-mails on various financial crimes.

    The crimes, which include cheques knitting, forging of banks’rubber stamps, letter headed papers, and signatures of the managing directors of the over 700 microfinance banks were committed in the past few years.

    Other Financial Supervisory Institutions Department, CBN Examiner, Mr David Adelana, disclosed this during a conference organised by the National Association of Microfinance Banks (Southwest Zone) in Lagos.

    He said the crimes were mainly advanced fee fraud.

    He delivered a paper entitled: Frauds and forgeries in microfinance banks: causes, detection and control.

    Adelana said the number of fraudulent cases reported against the banks fell by 3,433 from 5,960 in 2010 to 2,527 in 2011. He said the number of complacent cases recorded and treated was 1,526 in 2010 as against 1,800 in 2011.

    He said the refund to customers was N4.3billion in 2011, as against N2.2billion in 2011, adding that the apex bank has put in place institutional frameworks to check sharp practices in the industry.

    He divided the perpetrators of the criminal activities into three groups, namely internal, external and mixed. He said the internal group relates to the financial crimes committed by the staff of the banks, while the external group has to do with non-staff of the banks, while the mixed group includes the staff and non-staff of the banks.

    According to him, CBN has organised capacity building programmes for the management of the banks to prevent undue exposure to risks. He said the banks have been directed to provide measures that would prevent poor management of funds and further check unwholesome practices.

    He said: “We have said it times without number that banks must tightening control on dormant accounts. Dormant accounts should be transferred to the table of the managing directors of the banks, and not information and technology (IT) among other ordinary members of staff to prevent manipulation. To ensure firm control of dormant accounts, the managing directors and the IT section should be allowed to have access to dormant accounts in the banks.”

    On cheques knitting, Adelaja said its becoming harder for fraudsters to succeed because the system of transactions has improved considerably.

    “Cheques knitting cannot fly again because the system has gone 3+3 and 3+2 transactions. Based on this, it would become difficult to manipulate the transaction process and made away with the bank’s money,” he added.

    Also, the Chairman, National Association of Microfinance Banks (NAMBs), Mr Olufemi Babajide, said the association was aware of sharp practices people were committing in the name of the banks. He said cases abound where people forged the signatures of the managing directors, the logos, letter-headed papers among other documents of the banks to get visas.

    “On the issue of people approaching embassies with forged documents of the banks to get visas or conduct any other transactions, we made our positions known on it. What we agreed is that the statements that are being taken to the embassies must bear the original signatures of the managing directors of the banks. The names of the MDs must be handwritten. We have advised the embassies, among other agencies to confirm the identity of any statement brought to them in the name of MFBs,“ he said.

  • CBN to implement New Capital Accord framework by year-end

    CBN to implement New Capital Accord framework by year-end

    The Central Bank of Nigeria (CBN) has expressed its readiness to execute a framework on New Capital Accord (Basel II) before year end, The Nation has learnt.

    The CBN Deputy Governor, Financial Systems Stability, Kingsley Moghalu, confirmed this during a conference for bank directors organised by the Financial Institutions Training Centre (FITC) in Lagos.

    He said there would be full adoption of the International Financial Reporting Standards (IFRS) by banks in same period, adding that both principles would enhance transparency and additional disclosures in banks’ financial reporting.

    Consultant to the CBN on Basel II and IFRS Implementation Project, Gianfranco Antonio Vento,said there was need for banks to assess their capital adequacy positions relative to their overall risks. He called for regulators to review and take appropriate actions in response to those assessments.

    Vento explained that the Basel standard was meant to ensure that a bank maintains an adequate level of unencumbered, high-quality liquid assets that can be converted into cash to meet its liquidity needs for a 30 calendar day under a significantly severe liquidity stress scenario specified by supervisors.

    At a minimum, the stock of liquid assets should enable the bank to survive until Day 30 of the stress scenario, by which time it is assumed that appropriate corrective actions can be taken by management and/or supervisors, and/or the bank can be resolved in an orderly way.

    He said local banks are already meeting with the CBN staff involved in regulation and supervision of the Basel project while administration of a questionnaire to the lenders is ongoing. It was also leant that individual meetings with the banks and collection of all the additional information necessary for the implementation was also on course.

    Vento said the result has been the Baseline Survey to highlight the state-of-the-art in the implementation process of Basel II and III in the banking sector, to enhance the implementation as well as the following stages for an effective introduction of the new regulatory framework.

    Banks are also involved in the preparation of a Quantitative Impact Study (QIS) and a comprehensive and detailed regulatory framework meant to clarify and adapt the Basel II and III principles to the local context.

    “Preparation and review of gap analyses that banks will perform in order to point out their distances from the minimum regulatory standards to be implemented as well as progressive implementation of Basel II and III rules, with a parallel running period in which the existing rules will cohabit with the new framework,” he said.

    He said banks, which have developed internal models and are able to meet the minimum standards fixed in the new Basel II and III regulatory framework, will be allowed to apply for the validation of their models.

    Vento explained that there was need to encourage market discipline by developing a set of disclosure requirements that allow market participants to assess key information about a bank’s risk profile and level of capitalisation.

    “By bringing greater market discipline to bear through enhanced disclosures, the Basel capital framework can produce significant benefits in helping banks and supervisors to manage risk and improve stability,” he said.

     

     

     

     

     

     

     

     

  • CBN issues mobile money license to firm

    CBN issues mobile money license to firm

    Cellullant Nigeria Limited, a leading mobile commerce network operator, has joined the league of organisations operating mobile money services in the country having successfully secured a licence by the Central Bank of Nigeria (CBN).

    The firm was issued the licence last September.

    The apex bank issued the first set of mobile payments licences in 2011 to several firms in a move to make Nigerians access payments services through their mobile phones.

    The Managing Director, Cellulant Corporation, Mr. Goke Akinboro, who expressed delight at the award of the licence, assured that his firm would offer its customers value for their money.

    “Our firm is very excited that the CBN has considered us worthy to be granted a mobile payment services licence. We view this as a challenge to us to give Nigerians very reliable and customer-friendly services,” said an elated Akinboro, adding: “We have already proven our expertise in various mobile wireless applications and solutions that we provide across various segments of the Nigeria economy and it is our intention to do the same in the mobile payments services segment.”

  • $6.5b annual support for agric coming

    To secure more funding for agribusiness, the Central Bank of Nigeria (CBN) and banks are implementing fresh measures aimed at empowering farmers financially and providing favourable fiscal policies for their operations.

    The regulator said an investment of $6.5 billion per annum was needed to take agribusiness to the desired growth level , contrary to annual fund supply of $1.5 billion.

    The apex bank had granted zero tariffs for the importation of agricultural machinery and equipment. The bank said it took the action to create a robust agricultural sector and provide an enabling environment for investment.

    CBN Director, Development Finance Department, Paul Eluhaiwe, said banks were working with the Alliance for a Green Revolution in Africa (AGRA) and other key stakeholders to develop an innovative financing mechanism, tagged Nigeria Incentive-based Risk Sharing System for Agricultural Lending (NIRSAL).

    The apex bank Director said the scheme is expected to provide farmers with affordable financial products, while reducing the risk of loans to farmers under other financing programmes offered by institutions.

    The initiative will build capacities of banks to expand lending to agriculture, deploy risk sharing instruments to lower risks of lending and develop a bank rating scheme to assess banks based on their lending to the agricultural sector. It is expected that the initiative will help unlock access to bank finance, critical for stimulating agric lending and increasing food and crop production in the country.

    Besides, the N200 Billion Commercial Agriculture Credit Scheme (CACS) was established in March 2009 by the CBN in partnership with the Federal Ministry of Agriculture and Rural Development (FMARD) to fast track the development of commercial agriculture in the country. The applicable interest rate under the Scheme has been retained at nine per cent even as the fund has continued to be disbursed to eligible applicants through the deposit money banks.

    The banking watchdog admitted that the future of agriculture in sub-Saharan Africa is clouded with several uncertainties that include increasing resource scarcity, heightened risks from climate change, higher energy prices, demand for bio-fuels and doubts about the speed of technical progress.

    Head Agricultural Banking, Stanbic IBTC, Jacques Taylor, said in an interview in Lagos that access to agricultural input, market linkages, technical support services as well as access to financial services are vital to reviving the nation’s ailing agriculture sector. According to him, value chain financing will ensure the flow of financing within the agricultural sector, across all value chain actors, thereby getting agricultural products to the markets.

    He said Standard Bank and Stanbic IBTC are driven by the conviction that opportunities exist to provide an end-to-endbanking solution for agriculture in which the banks can leverage and cross-sell a full suite of products and services, from traditional commercial banking and lending products to crop and weather insurance products.

  • CBN audits credit cards to check money laundering

    CBN audits credit cards to check money laundering

    THE Central Bank of Nigeria (CBN) has started the audit of Naira credit cards issued by banks. It also directed the banks to unify account opening forms to check money laundering.

    Investigation showed that the apex bank took the step to forestall the use of accounts for money laundering and financial terrorism by bank customers.

    CBN Director, Financial Policy and Regulation, U. A. Obot, who confirmed this, said lack of uniformity in account opening procedure and documentation for prospective customers has continued to hinder the effectiveness of Know Your Customer requirement in banks and other financial institutions (OFIs).

    He said the apex bank has prepared a draft copy of the proposed form and asked forn banks’ and OFIs’ input to enable it to approve the final copy for implementation by the lenders.

    The director said the adverse effect of this on the fight against money laundering and financial terrorism could not be over-emphasised.

    The apex bank said the card audit became exigent after it started the implementation of its anti-money laundering/combating financial terrorism (AML/CFT) risk-based supervision framework for banking transactions, which it issued in 2011.

    To achieve this, Director, Trade and Exchange Department, Batari Musa, has asked authorised dealers to forward hard copies of their returns on forex transactions on Naira-denominated cards, showing the source of funds monthly for 2010 and 2011.

    Batari said authorised dealers should provide information about banks used in facilitating the transactions, card funding source at the Wholesale Dutch Auction System (WDAS) and Interbank, month and year of transactions, card type, amount loaded in Naira, dollar equivalent and naira or dollar exchange rate.

    In addition, the regulator requested for hard copies of the information to be forwarded to designated address.

    In both cases, the information should be received in Trade & Exchange Department, of the CBN by today.

    The regulator said execution of risk-based supervision to combating money laundering and terrorist financing depends on a sound understanding of the threats and vulnerabilities of the menace to each financial institution in particular and e financial industry in general.

    It said the measure is further supported by the importance the Financial Action Task Force (FATF) attached to the risk-based approach to AML/CFT supervision in its revised recommendations issued earlier in the year.

  • CBN recovers N5b wrong bank charges

    The Central Bank of Nigeria (CBN) has recovered over N5 billion which it said was wrongly taken from customers as bank charges.

    Deputy Governor of the CBN, Kingsley Moghalu, disclosed this during an interactive session with the Senate Committee on Banking, Insurance and Other Financial Institutions in Abuja.

    He said the CBN has worked out a strategic framework to prevent bank failures in the future.

    He listed the strategic priority of the CBN for the financial sector, between now and 2015, to include macro prudential framework, consumer protection and data integrity.

    Moghalu said: “Do the reforms mean that we have come to the end of history and there will no longer be any bank failures in Nigeria?

    “I will not be responsible if I give you that type of assurance because we do not know the future.

    “However the much we can see, we have tried to take care and in addition we have tried to put in place a number of safe guards to take care of contingent situations that may not be foreseen.

    “By putting in place systems of risk management and very importantly, moving to the area of macro prudential supervision and regulation of the banking system,” he said.

    According to him, the CBN believes that the consumers of financial products need a far higher level of protection that has been the case in the past, adding that the apex bank was aware of complaints of all sorts of inappropriate bank charges and had taken a number of steps to begin to address the problems, systemically.

    “I can tell you that in the last year or two, the CBN has been able to recover N5 billion in wrong charges to bank customers.

    “Those monies have been returned to Nigerians by their banks at the directive of the CBN in the course of our work in consumer protection,” he said.

    He added that the apex bank wants to ensure that all the data received from banks are completely accurate with no room for errors.

    He said the CBN has made significant progress in stabilising the financial sector.

    “The establishment of the Asset Management Corporation of Nigeria (AMCON) has helped in no small measure to stabilise the Nigerian banking system,” he said.

    He said the CBN has to stop banks from giving further loans to customers owing up to N5billion.

    He said the step was meant to prevent AMCON from becoming a moral hazard.

     

  • IMF hinges Nigeria’s 7% growth on oil output

    IMF hinges Nigeria’s 7% growth on oil output

    • Forecasts 5% for Sub-Saharan Africa

    THE International Monetary Fund (IMF) yesterday hinged Nigeria’s ability to achieve an overall Gross Domestic Product (GDP) growth rate of seven per cent in 2012, on a rebound in its oil output.

    “In Nigeria, non-oil GDP growth will moderate with the softer external environment and tighter macroeconomic policies. But a slight rebound in oil output will keep overall GDP growth at 7 per cent, “ the Fund stated in its October 2012 World Economic Outlook released yesterday in Tokyo, Japan, venue of the on-going World Bank/IMF Annual Meetings.

    The latest forecast by the IMF, is in line with the Central Bank of Nigeria’s (CBN’s) projection that Nigeria’s Gross Domestic Product (GDP) is expected to grow by around seven per cent this year. The CBN Governor, Sanusi Lamido Sanusi had said Nigeria now has the right policy makers pushing forward reforms, which would ensure Nigeria achieved a significant rise in growth in the coming years.

    The real risk in Nigeria is that of policy, adding that we have achieved an average of seven per cent growth for the last decade, and this is without steady electricity supply or adequate infrastructure,” Sanusi said early this year.

    “GDP can easily move into double-digits If we implement all the things planned. There will be a major step change in growth rates in the next two to three years,” he added.

    Driven by non-oil sector growth, Nigeria’s economy grew 6.28 per cent in the second quarter of this year, up slightly from 6.17 per cent in the first quarter. Historically, from 2005 until 2012, Nigeria’s GDP growth rate averaged 6.8 per cent, reaching an all time high of 8.6 per cent in December of 2010 and a record low of 4.5 percent in March of 2009.

    The GDP growth rate provides an aggregated measure of changes in value of the goods and services produced by an economy.

    Average daily crude oil output from the country also rose marginally to 2.38 million barrels per day (bpd) in the second quarter from 2.35 million bpd in the first quarter.

    Christened, “Coping with high debt and sluggish growth,” the IMF said growth in the oil-exporting economies is projected to remain high, near six per cent in 2012, adding that increased oil production in Angola will expand its GDP by close to 6¾ per cent this year.

    “In the baseline scenario, under which strains in the euro area remain contained and the global economy expands by 3¼ to 3½ per cent this year and next, growth in Sub-Sahara Africa, will continue above five per cent during 2012–13,” the Fund said.

    Noting that external shocks remain elevated, the IMF advised policy makers in the region to use the window provided by strong growth to rebuild budgetary space and normalize monetary conditions to be better prepared for downside risks.

    “Economic activity in sub-Saharan Africa (SSA) has expanded by more than 5 per cent in each of the past three years -continuing a decade-long run of strong performance that was only briefly interrupted by the global downturn in 2009.

    Most SSA economies are participating in this solid expansion, with the notable exception of South Africa, which has been hampered by its strong linkages with Europe, as well as some countries in western Africa affected by drought and civil conflict.

    “ More recently, some food importers in the region have also been hit by the sharp increase in global food prices for a few major crops -leading to higher headline inflation and widening trade imbalances – although so far with less severe effects than during the 2007 -08 food price shocks. The region’s recent growth has occurred against abackdrop of difficult external conditions, including the escalation of the euro area crisis.

    “But apart from South Africa, financial spillovers from Europe to the region have been modest. Export diversification has reduced exposure to weak demand from advanced economies, and high commodity prices have supported the region’s commodity exporters and boosted investment in resource extraction.

  • ‘Credit bureaux ’ll reduce loan default’

    ‘Credit bureaux ’ll reduce loan default’

    The services of credit bureaux are central to reducing the rate of non-performing loans, the Bank Director Associat-on of Nigeria (BDAN) has said.

    BDAN’s President, Sonny Kuku, said the bureaux would complement the on-going banking reforms of the Central Bank of Nigeria (CBN), adding that the increased use of services of credit bureaux will enable banks to create cleaner balance sheets.

    He said: “We have devoted the 2012 edition of the annual BDAN Stakeholders Forum to examine the linkage between credit bureaux and the banking industry, thus we have chosen the theme of the 2012 edition to be, ‘How Banks can leverage on Credit Bureax Services to accelerate growth.’

    Kuku said experiences of other countries showed that credit bureaux offer services, which if properly harnessed, can reduce banking sector crisis and facilitate industry growth.

    Banks, he said, should also tap into the opportunities offered by credit bureaux by ensuring that top decision makers are acquainted with them opportunities, thereby promoting the use of credit bureaux services.

    The association’s scribe, Yemi Idowu, said banks’ primary focus is growth, having overcome the challenges of the global financial crises, that led to the liquidation of some of their counterparts across the world. He said the group’s focus is not only how to achieve growth, but sustainable growth, assisted by services of credit bureaux.

    Idowu said the prevalence of non-performing loans constitute a major setback for banks, which could be addressed by the use of credit bureaux. “There is the need for industry mechanism to address this problem. With credit bureaus, the problem of non-performing loans will be minimised and nipped in the bud,” he said, adding that while the role of the Asset Management Company of Nigeria (AMCON) is critical in taking over non-performing loans of banks, the services of credit bureaux will however, ensure that the level of loan default is reduced.

    He explained that while AMCON is curative, the credit bureaux sub-sector is preventative, stating that BDAN wants banks to focus more on the services of credit bureaux, so as to achieve an improved credit culture in the country.

    The Forum, which is scheduled to hold in November, will feature a keynote address by the CBN Governor, Sanusi Lamido Sanusi.